Mixed picture for Spanish insurance as D&O softens while property hardens

Insurance buyers say that the Spanish insurance market has stabilised in recent renewals but at a level that means they will continue to pay much more for their cover than a few years ago. However, signs of a looser market in segments such as cyber and D&O have been accompanied by a somewhat surprising re-hardening of the property market, due to the impact of nat cat losses in the past year. Participants of the Spanish leg of our Risk Frontiers Europe survey note that this time around, the hardening property insurance market began on the reinsurance side of the business. “We all believed that property insurance would start the road down [towards a soft market] in 2022 but it has turned around completely. Price increases have been very significant,” said Ramón de la Vega, risk financing director at Telefónica. Daniel San Millán, president of risk management association Igrea, said part of the problem is that insurers can’t accurately model the rise in nat cat losses. “It seems that insurance companies are in a bind because they still do not know how to model climate change. It is an industry-wide problem and it makes the market tense,” he said. There are also concerns regarding a number of specific insurance programmes that the market refuses to take, despite price corrections over the past few years. “It is hard to find capacity for waste recycling plants, and I would say that the same happens with PI. Both those products remain expensive,” said David González, director of risk and insurance at Sacyr, the construction group. “The market has applied rate increases that are too steep in certain lines, especially D&O, PI and cyber. And, what is worse, radically restricted available capacities,” added Lourdes Freiria, general director of risk and insurance at construction group Grupo San José. “A market that is getting harder in a very strong way is terrorism and political violence due to the 2022 claims,” De la Vega said. “Treaties have become several times more expensive. Some companies have stopped writing the risk.” On the other hand, he said, lines that not long ago were extremely problematic have been less challenging of late. “The market is offering more D&O capacity and there is more flexibility and competition among insurers,” De la Vega said. “On D&O, it is reasonable to think that companies have already reached an equilibrium, and within that equilibrium things should go back to normal,” González agreed. Another segment where the situation looks less dire than some months ago is cyber, although it still presents challenges for buyers. “I would say there is plenty of capacity in the market for cyber. It seems to have loosened up a bit. But which companies are offering more than €7.5m? Insurers offering €20m are a thing of the past,” San Millán said. “We retain a large cyber primary layer in our captive. When insurers see that you take a share of the risk, they want to go along with you. Prices will not go down. I believe they will continue to rise. But we had a very good and unexpected renewal of our cyber programme. I have found cheaper capacity, especially for the top layers,” added the Igrea president. “The [cyber] market has professionalised underwriting and is trying to allocate capacity to risks that look good to insurers,” De la Vega added. “We have recently been to London and met 20 underwriters that offered capacity for cyber. Some companies are offering larger primary layers and, in general, they are raising capacities."

Mixed picture for Spanish insurance as D&O softens while property hardens

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